SEC mandates company disclosures on mineral use

U.S. regulators mandated Wednesday that public companies disclose information about their use of minerals from Congo, where militias linked to atrocities have profited from mining minerals used in electronics, jewelry and other goods.

The Securities and Exchange Commission voted 3-2 to adopt a rule under the 2010 financial overhaul law. Public companies that use the designated minerals from Congo and neighboring countries in their products will have to disclose annually their efforts to trace the minerals back to their sources.

The SEC also voted 2-1 to require producers of oil, natural gas or minerals to disclose any payments involving commercial development that they make to the U.S. or a foreign government. The payments would include taxes, royalties and licensing fees.

The regulators say stricter reporting requirements on mineral use might help curb the violence in Congo. They also say the rules will make companies more accountable to their shareholders.

Some companies have complained about the difficulty of determining whether, or in what quantity, certain products include the affected minerals.

The two Republican SEC commissioners, Troy Paredes and Daniel Gallagher, opposed the adoption of the rule. They said they think SEC rules aren’t the proper way to achieve the goal of ending violence in Congo.

Paredes said the reporting requirements could have undesired effects in Congo. For example, he said, the minerals could be smuggled into other countries and sold as if they had originated there.

Congo holds about 70 percent of the world’s supply of tantalum and substantial deposits of gold and tin.

As with the so-called “blood diamonds” mined in Zimbabwe and used to finance wars in Sierra Leone and Liberia, international rights groups have pushed for more transparency in the use of minerals that have benefited militias in Congo.

Civil wars killed an estimated 5 million people in Congo in the 1990s. The fighting deteriorated into a scramble for Congo’s minerals that drew in the armies of eight African nations. Though the conflict ended in the rest of Congo in 2002, armed groups still operate in the mineral-rich eastern portion of the country.

The SEC rule brings to light the sourcing of minerals “that help fuel some of the most vicious and violent groups in the world,” Sen. Dick Durbin of Illinois, the Senate Democrats’ No. 2 leader, said in a statement. Durbin was an author of the provision in the overhaul law calling for minerals disclosure.

The SEC initially proposed the disclosure rule in December 2010. The activist group Oxfam America has protested at the SEC’s headquarters and sued the agency to protest the delay in issuing final rules. At the same time, business groups have lobbied the SEC to make the rules more lenient.